BUSINESS LOAN AGREEMENT
Exhibit 10.1
Borrower:
|
CORNERSTONE REALTY FUND, LLC 0000 XXXX XXXXXX, XXXXX 000 XXXXXX, XX 00000-0000 |
Lender: | Xxxxxx & Merchants Bank of Long Beach, a CA Corp Fullerton Xxxxxx 000 Xxxxx Xxxxxx Xxxxxxxxx Xxxxxxxxx, XX 00000 |
THIS BUSINESS LOAN AGREEMENT dated November 19, 2010, is made and executed between CORNERSTONE
REALTY FUND, LLC (“Borrower”) and Farmers & Merchants Bank of Long Beach , a CA Corp (“Lender”)
on the following terms and conditions. Borrowers has received prior commercial loans from Lender or
has applied to Lender for a commercial loan or loans or other financial accommodations, including
those which may be described on any exhibit or schedule attached to this Agreement. Borrower
understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying
upon Borrower’s representations. Warranties, and agreements as set forth in this Agreement; (B) the
granting, renewing or extending of any Loan by Lender at all times shall be subject to Lender’s
sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and
conditions of this Agreement.
TERM. This agreement shall be effective as of November 19, 2010, and shall continue in full force
and effect until such time as all of Borrower’s Loans in favor of Lender have been paid in full,
including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or
until such time as the parties may agree in writing to terminate this Agreement.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial Advance and each
subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s
satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the
Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3)
financing statements and all other documents perfecting Lender’s Security interests; (4)
evidence of insurance as required below; (5) together with all such Related Documents as Lender
may require for the Loan; all in form and substance satisfactory to Lender and Lender’s counsel.
Borrower’s Authorization. Borrower shall have provided in form and substance satisfactory to
Lender properly certified resolutions, duly authorizing the execution and delivery of this
Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such
other resolutions, authorizations, documents and instruments as Lender or its counsel, may
require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other
expenses which are then due and payable as specified in this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set forth in this
Agreement, in the Related Documents, and in any document or certificate delivered to Lender
under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any Advance a condition which would
constitute an Event of Default under this Agreement or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this
Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal,
extension or modification of any Loan and at all times any Indebtedness exists:
Organization. Borrower is a limited liability company which is, and at all times shall be, duly
organized, validly existing, and in good standing under and by virtue of the laws of the State
of California. Borrower is duly authorized to transact business in all other states in which
Borrower is doing business having obtained all necessary filings, governmental licenses and
approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at
all times shall be, duly qualified as a foreign limited liability company in all states in which
the failure to so qualify would have a material adverse effect on its business or financial
condition Borrower has the full power and authority to own its properties and to transact the
business in which it is presently engaged or presently proposes to engage. Borrower maintains an
office at 0000 XXXX XXXXXX, XXXXX 000, XXXXXX, XX 00000-0000. Unless Borrower has designated
otherwise in writing, the principal office is the office at which Borrower keeps its books and
records including its records concerning the Collateral. Borrower will notify Lender prior to
any change in the location of Borrower’s state of organization or any change in Borrower’s name.
Borrower shall do all things necessary to preserve and to keep in full force and affect its
existence, rights and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority or court
applicable to Borrower and Borrower’s business activities.
Assumed Business Names. Borrower has filed or recorded all documents or filings required by law
relating to all assumed business names used by Borrower. Excluding the name of the Borrower,
the following is a complete list of all assumed business names under which Borrower does
business: None.
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BUSINESS LOAN AGREEMENT
(Continued)
(Continued)
Authorization. Borrower’s execution, delivery and performance of this Agreement and all the
Related Documents have been duly authorized by all necessary action by Borrower and do not
conflict with, result in a violation of, or constitute a default under (1) any provision of (1)
Borrower’s articles of organization or membership agreements, or (b) any agreement or other
instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order
applicable to Borrower or to Borrower’s properties.
Financial Information. Each of Borrower’s financial statements supplied to Lender truly and
completely disclosed Borrower’s financial condition as of the date of the statement, and there
has been no material adverse change in Borrower’s financial condition subsequent to the date of
the most recent financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Legal Effect. This agreement constitutes, and any instrument or agreement Borrower is required
to give under this Agreement when delivered will constitute legal, valid and binding obligations
of Borrower enforceable against Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower’s
financial statements or in writing to Lender and as accepted by Lender, and except for property
tax liens for taxes not presently due and payable, Borrower owns and has good title to all of
Borrower’s properties free and clear of all Security Interests, and has not executed any
security documents or financing statements relating to such properties. All of Borrower’s
properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing
statement under any other name for at least the last five (5) years.
Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower
represents and warrants that: (1) During the period of Borrower’s ownership of the Collateral,
there has been no use, generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under, about or from any of the
Collateral; (2) Borrower has no knowledge of, or reason to believe that there has been (a) any
breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage,
treatment, disposal, release or threatened release any Hazardous Substance on, under, about or
from the Collateral by any prior owners or occupants or any of the Collateral; or (c) any actual
or threatened litigation or claims of any kind by any person relating to such matters. (3)
Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the
Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous
Substance on, under, about or from any of the Collateral; and any such activity shall be
conducted in compliance with all applicable federal, state and local laws, regulations, and
ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and
its agents to enter upon the Collateral to make such inspections and tests as Lender may deem
appropriate to determine compliance of the Collateral with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes
only and shall not be construed to create any responsibility or liability on the part of Lender
to Borrower or to any other person. The presentations and warranties contained herein are based
on Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous
Substances. Borrower hereby (1) hereby releases and waives any future claims against Lender for
indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under
any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all
claims, losses liabilities, damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal, release or threatened
release of a hazardous waste or substance on the Collateral. The provisions of this section of
the Agreement, including the obligation to indemnify and defend, shall survive the payment of
the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not
be affected by Lender’s acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.
Taxes. To be best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are
or were required to be filed, have been filed, and all taxes, assessments and other governmental
charges have been paid in full, except those presently being or to be contested by Borrower in
good faith in the ordinary course of business and for which adequate reserves have been
provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not
entered into or granted any Security Agreements, or permitted the filing or attachment of any
Security Interests on or affecting any of the Collateral directly or indirectly securing
repayment of Borrower’s Loan and Note, that would be prior or that may in any way be superior to
Lender’s Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related
Documents are binding upon the signers thereof, as well as upon their successors,
representatives and assigns, and are legally enforceable in accordance with their respective
terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement
remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse
changes in Borrower’s financial condition, and (2) all existing and all threatened litigation,
claims, investigations, administrative proceedings or similar actions affecting Borrower or any
guarantor which could materially affect the financial condition of Borrower or the financial
condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with GAAP, applied on a
consistent basis, and permit Lender to examine and audit Borrower’s books and records at all
reasonable times.
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| Financial Statements. Furnish Lender with the following: |
BUSINESS LOAN AGREEMENT
(Continued)
(Continued)
Annual Statements. As soon as available, but in no event later than one-hundred-twenty
(120) days after the end of each fiscal year, Borrowers balance sheet and income statement
for the year ended, complied by a certified public accountant satisfactory to Lender.
Tax Returns. As soon as available, but in no event later than 20 days after the applicable
filing date for the tax reporting period ended, Federal and other governmental tax returns,
prepared by a certified public accountant satisfactory to Lender.
Additional Requirements.
| (1) | If a filing date extension request is submitted to the taxing authority for any of the Federal or other governmental tax returns required herein, the Borrower(s) and/or Guarantor(s) agree to provide Lender with a copy of each extension request within 20 days of the submission of the request to the taxing authority. | ||
| (2) | All K-1s and supplemental exhibits and schedules are to be submitted with the Federal or other governmental tax returns required herein. | ||
| (3) | As soon as available, but in no event later than 120 days after the end of each year, profit and loss statements for each property serving as Collateral for the Note. | ||
| (4) | As soon as available, but in no event later than 120 days after the end of each year, Rent Rolls for each property serving as Collateral for the Note including copies of any newly executed leases or lease amendments. |
All financial reports required to be provided under this Agreement shall be prepared in accordance
with GAAP, applied on a consistent basis and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and statements, as Lender may request
from time to time.
Financial Covenants and Ratios. Comply with the following covenants and ratios:
Minimum Income and Cash flow Requirements. Borrower shall comply with the following cash flow
ratio requirements:
Cash Flow from Operations / Debt Service on Note Ratio. Maintain a ratio of Cash Flow from
Operations / Debt Service on Note in excess of 3.000 to 1.000. The Cash Flow from Operations
/ Debt Service on Note Ratio will be calculated on a cash basis using the Financial
Statement information required above. The ratio “Cash Flow from Operations / Debt Service”
means the sum of (a) net operating income, plus (b) any cash expenditures deducted from the
operating income for debt service on the Note during the twelve-month period ending on the
date of determination divided by the annual debt service required on the Note. “Net
operating income” shall mean all cash receipts from the Collateral less all cash
expenditures made in connection with the operation of the Collateral.
Additional Requirements. Loan to Value Requirement. The Maximum Loan to Value Ratio is 40%.
The Maximum Loan to Value Ration shall mean the outstanding principal amount (of this loan
and any senior indebtedness) divided by the value of the Collateral. The Collateral value
will be determined by Lender at its sole discretion using the methods typically used by
Lender to determine the value of real property. The Maximum Loan to Value Ratio must be
maintained at all times.
Except as provided above, all computations made to determine compliance with the
requirements contained in this paragraph shall be made in accordance with generally accepted
accounting principles, applied on a consistent basis and certified by Borrower as being true
and correct.
Insurance. Maintain fire and other risk insurance, public liability insurance, and such other
insurance as Lender may require with respect to Borrower’s properties and operations, in form,
amounts, coverages and insurance companies acceptable to Lender. Borrower upon request of
Lender, will deliver to Lender from time to time the policies or certificates of insurance in
form satisfactory to Lender including stipulations that coverages will not be cancelled or
diminished without at least ten (10) days prior written notice to Lender. Each insurance policy
shall also include an endorsement providing that coverage in favor of lender will not be
impaired in any way by any act, omission or interest for the Loans, Borrower will provide Lender
with such lender’s loss payable or other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance
policy showing such information as Lender may reasonably request, including without limitation
the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the properties insured; (5) the then current property values on the basis of which insurance
has been obtained, and the manner of determining those values; and (6) the expiration date of
the policy. In addition, upon request of Lender (however not more often than annually), Borrower
will have an independent appraiser satisfactory to Lender determine, as applicable, the actual
cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by
Borrower.
Other Agreements. Comply with all terms and conditions of all other agreements, whether now or
hereafter existing, between Borrower and any other party and notify Lender immediately in
writing of any default in connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations, unless
specifically consented to the contrary by Lender in writing.
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BUSINESS LOAN AGREEMENT
(Continued)
(Continued)
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations,
including without limitation, all assessments, taxes, governmental charges, levies and liens, of
every kind and nature, imposed upon Borrower or its properties, income or profits, prior to the
date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien
or charge upon any of Borrower’s properties, income or profits. Provided however, Borrower will
not be required to pay and discharge any such assessment, tax, charge, xxxx, xxxx or claim so
long as (1) the legality of the same shall be contested in good faith by appropriate
proceedings, and (2) Borrower shall have established on Borrower’s books adequate reserves with
respect to such contested assessment, tax, charge, xxxx, xxxx or claim in accordance with GAAP.
Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions
set forth in this Agreement, in the Related Documents, and in all other instruments and
agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of
any default in connection with any agreement.
Operations. Maintain executive and management personnel with substantially the same
qualifications and experience as the present executive and management personnel; provide written
notice to Lender of any change in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner.
Environmental Studies. Promptly conduct and complete, at Borrower’s expense, all such
investigations, studies, samplings and testings as my be requested by Lender or any governmental
authority relative to any substance, or any waster or by-product of any substance defined as
toxic or a hazardous substance under applicable federal, state or local law, rule, regulation,
order or directive, at or affecting any property or any facility owned, leased or used by
Borrower.
Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations,
now or hereafter in effect, of all governmental authorities applicable to the conduct of
Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral
including without limitation, the Americans With Disabilities Act. Borrower may contest in good
faith, any such law, ordinance or regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing
so and so long as, in Lender’s sole opinion, Lender’s interests in the Collateral are not
jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender’s interests.
Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all
Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit
Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books
accounts, and records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon request of
Lender, shall notify such party to permit Lender free access to such records at all reasonable
times and to provide Lender with copies of any records it may request, all at Borrower’s
expense.
Environmental Compliance and Reports. Borrower shall comply in all respects with any and all
Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional
action or omission on Borrower’s part or on the part of any third party, on property owned
and/or occupied by Borrower, any environment activity where damage may result to the
environment, unless such environmental activity is pursuant to and in compliance with the
conditions of a permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty (30) days after
receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower’s part in connection with any environmental
activity whether or not there is damage to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages,
deeds of trust, security agreements, assignments, financing statements, instruments, documents
and other agreements as Lender of its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.
LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect
Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this
Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or
pay when due any amounts Borrower is required to discharge or pay under this Agreement or any
Related Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action
that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens,
security interests, encumbrances and other claims, at any time levied or placed on any Collateral
and paying all costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear interest at the rate
charged under the Note from the date incurred or paid by Lender to the date of repayment by
Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s option, will
(a) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be
payable with any installment payments to become due during either (1) the term of any applicable
insurance policy; or (2) the remaining term of the Note; or (c) be treated as a balloon payment
which will be due and payable at the Note’s maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in
effect, Borrower shall not, without the prior written consent of Lender:
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BUSINESS LOAN AGREEMENT
(Continued)
(Continued)
Indebtedness and Liens. 1. Except for trade debt incurred in the normal course of business and
indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for
borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease,
grant a security interest in, or encumber any of Borrower’s assets (except as allowed as
Permitted Liens), or (3) sell with recourse any of Borrower’s accounts, except to Lender.
Continuity of Operations. (1) Engage in any business activities substantially different than
those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer,
acquire or consolidate with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (3) make any distribution with respect to
any capital account, whether by reduction of capital or otherwise.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other
person, enterprise or entity, (2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the
ordinary course of business.
Agreements. Enter into any agreement containing any provisions which would be violated or
breached by the performance of Borrower’s obligations under this Agreement or in connection
herewith.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether
under this Agreement or under any other agreement, Lender shall have no obligation to make Loan
Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the
terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any
guarantor has with Lender; (B) Borrower or any guarantor dies, becomes incompetent, or becomes
insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C)
there occurs a material adverse change in Borrower’s financial condition, in the financial
condition of any Guarantor, or in the value of any Collateral security any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor’s guaranty
of the Loan or any other Loan with Lender; or (E) Lender in good xxxxx xxxxx itself insecure, even
though no Event of Default shall have occurred.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Borrower fails to make any payment when due under the Loan.
Other Defaults. Borrower fails to comply with or to perform any other term, obligation,
covenant or condition contained in this Agreement or in any of the Related Documents or to
comply with or to perform any term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any
other creditor or person that may materially affect any of Borrower’s or any Grantor’s property
or Borrower’s or any Grantor’s ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by
Borrower or on Borrower’s behalf under this Agreement or the Related Documents is false or
misleading in any material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.
Death or Insolvency. The dissolution of Borrower (regardless of whether election to continue is
made), any member withdraws from Borrower, or any other termination of Borrower’s existence as a
going business or the death of any member, the insolvency of Borrower, the appointment f a
receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any
type of creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full
force and effect (including failure of any collateral document to create a valid and perfected
security interest or lien) at any time and for any reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, by any creditor of
Borrower or by any governmental agency against any collateral securing the Loan. This includes a
garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However,
this Event of Default shall not apply if there is a good faith dispute by Borrower as to the
validity or reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in
an amount determined by the Lender, in its sole discretion, as being an adequate reserve or bond
for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of
any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the
validity of, or liability under, any Guaranty of the Indebtedness.
Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender
believes the prospect of payment or performance of the Loan is impaired.
Insecurity. Lender in good faith believes itself insecure.
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BUSINESS LOAN AGREEMENT
(Continued)
(Continued)
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise
provided in this Agreement or the or the Related Documents, all commitments and obligations of
Lender under this Agreement or the Related Documents or any other agreement immediately will
terminate (including any obligation to make further Loan Advances or disbursements), and at
Lender’s option, all Indebtedness immediately will become due and payable, all without notice of
any kind to Borrower, except that in the case of an Event of Default of the types described in the
“Insolvency” subsection above, such acceleration shall be automatic and not optional. In addition,
Lender shall have all the rights and remedies provided in the Related Documents or available at
law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights
and remedies shall be cumulative and may be exercised singularly or concurrently. Election by
Lender to purse any remedy shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not
affect Lender’s right to declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement.
Amendments. This Agreement, together with any Related Documents, constitutes the entire
understand and agreement of the parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement shall be effective unless given in writing and
signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of Lender’s costs and
expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection
with the enforcement of this Agreement. Lender may hire or pay someone also to help enforce this
Agreement and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including
attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals and any anticipated post-judgment collection
services. Borrower also shall pay all court costs and such additional fees as may be directed by
the court.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are
not to be used to interpret or define the provisions of the Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer,
whether now or later, of one or more participation interests in the Loan to one or more
purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, any information or knowledge Lender may have about
Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights
to privacy Borrower may have with respect to such matters. Borrower additionally waives any and
all notices of sale of participation interests, as well as all notices of any repurchase for
such participation interests. Borrower also agrees that the purchasers of any such participation
interests will be considered as the absolute owners of such interests in the Loan and will have
all the rights granted under the participation agreement or agreements governing the sale of
such participation interests. Borrower further waives all rights of offset or counterclaim that
it may have now or later against Lender or against any purchaser of such a participation
interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s
obligation under the Loan irrespective of the failure or insolvency of any holder of any
interest in the Loan. Borrower further agrees that the purchaser of any such participation
interests may enforce its interests irrespective of any personal claims or defenses that
Borrower may have against Lender.
Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the
extent not preempted by federal law, the laws of the State of California without regard to its
conflicts of law provisions. This Agreement has been accepted by Lender in the State of
California.
Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the
jurisdiction of the courts of Orange County, State of California.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement
unless such waiver is given in writing and signed by Lender. No delay or omission on the part of
Lender in exercising any right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and
Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender’s rights
or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever the
consent of Lender is required under this Agreement, the granting of such consent by Lender in
any instance shall not constitute continuing consent to subsequent instances where such consent
is required and in all cases such consent may be granted or withheld in the sole discretion of
Lender.
Notices. Any notice required to be given under this Agreement shall be given in writing, and
shall be effective when actually delivers, when actually received by telefacsimile (unless
otherwise required by law), when deposited with a nationally recognized overnight courier, or if
mailed, when deposited in the United States mail, as first class, certified or registered mail
postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any
party may change its address for notices under this Agreement by giving formal written notice to
the other parties, specifying that the purpose of the
notice is to change the party’s address. For notice purposes, Borrower agrees to keep Lender
informed at all times of Borrower’s current address. Unless otherwise provided or required by
law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to
be notice given to all Borrowers.
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BUSINESS LOAN AGREEMENT
(Continued)
(Continued)
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be
illegal, invalid or unenforceable as to any circumstance, that finding shall not make the
offending provision illegal, invalid or unenforceable as to any other circumstance. If feasible,
the offending provision shall be considered modified so that it becomes legal, valid and
enforceable. If the offending provision cannot be so modified, it shall be considered deleted
from this Agreement. Unless otherwise required by law, the illegality, invalidity or
unenforceability of any provision of this Agreement shall not affect the legality, validity or
enforceability of any other provision of this Agreement.
Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this
Agreement makes it appropriate, including without limitation any representation, warranty or
covenant, the word :Borrower” as used in this Agreement shall include all of Borrower’s
subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall
this Agreement be construed to require Lender to make any Loan or other financial accommodation
to any of Borrower’s subsidiaries or affiliates.
Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in
this Agreement or any Related Documents shall bind Borrower’s successors and assigns and shall
inure to the benefit of Lender and it successors and assigns. Borrower shall not, however, have
the right to assign Borrower’s rights under this Agreement or any interest therein, without the
prior written consent of Lender.
Survival of Representations and Warranties. Borrower understands and agrees that in making the
Loan, Lender is relying on all representations, warranties, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by Borrower to Lender under
this Agreement or the Related Documents. Borrower further agrees that regardless of any
investigation made by Lender, all such representations, warranties and covenants will survive
the making of the Loan and delivery to Lender of the Related Documents, shall be continuing in
mature, and shall remain in full force and effect until such time as Borrower’s Indebtedness
shall be paid in full, or until this Agreement shall be terminated in the manner provided above,
whichever is the last to occur.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
Collateral Release Provision. Lender agrees to facilitate the release of individual collateral
properties by issuance of a Partial Reconveyance of such properties upon receipt of principal
reduction(s) to the loan in an amount that when applied, would maintain compliance with the
“Cash Flow from Operations/Debt Service on Note Ratio” requirement and the “Loan-to-Value
Requirement” as set forth in the “Financial Covenants and Ratios” paragraph above. This
Collateral Release Provision shall not be applicable upon the occurrence of an event of Default
as defined herein or in the Related Documents.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used
in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts
shall mean amounts in lawful money of the United States of America. Words and terms used in the
singular shall include the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the meanings assigned
to them in accordance with generally accepted accounting principles as in effect on the date of
this Agreement:
Advance. The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower
or on Borrower’s behalf on a line or credit or multiple advance basis under the terms and
conditions of this Agreement.
Agreement. The word “Agreement” mans this Business Loan Agreement, as this Business Loan
Agreement may be amended or modified from time to time, together with all exhibits and schedules
attached to this Business Loan Agreement from time to time.
Borrower. The word “Borrower” means CORNERSTONE REALTY FUND, LLC and includes all co-signers and
co-makers signing the Note and all their successors and assigns.
Collateral. The word “Collateral” means all property and assets granted as collateral security
for a Loan, whether real or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a security interest, mortgage,
collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale,
trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever, whether created by law,
contract or otherwise.
Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local
statutes, regulations and ordinances relating to the protection of human health or the
environment, including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 72 U.S.C. Section 9601, et seq. (“CERCLA”),
the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No.99-299 (“XXXX”), the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section
6901, et seq., Chapters 6.5 through 7/7 of Division 20 of the California Health and Safety Code,
Section 25100, et seq., or other applicable state or federal laws, rules, or regulations adopted
pursuant thereto.
Event of Default. The words “Event of Default” mean any of the events of default set forth in
this Agreement in the default section of this Agreement.
GAAP. The word “GAAP” means generally accepted accounting principles.
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BUSINESS LOAN AGREEMENT
(Continued)
(Continued)
Grantor. The word “Grantor” means each of all of the persons or entities granting a Security
Interest in any Collateral for the Loan, including without limitation all Borrowers granting
such a Security Interest.
Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any or
all of the Loan.
Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, including without
limitation a guaranty of all or part of the Note.
Hazardous Substances. The words “Hazardous Substances” means materials that, because of their
quantity, concentration or physical chemical or infectious characteristics, may cause or pose a
present or potential hazard to human health or the environment when improperly used, treated,
stored disposed of, generated, manufactured, transported or otherwise handled. The words
“Hazardous Substances” are used in their very broadest sense and include without limitation any
and all hazardous or toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term “Hazardous Substances” also includes, without limitation, petroleum
and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word “Indebtedness” means the indebtedness evidence by the Note or Related
Documents, including all principal and interest together with all other indebtedness and costs
and expenses for which Borrower is responsible under this Agreement or under any of the Related
Documents.
Lender. The word “Lender” means Farmers & Merchants Bank of Long Beach, a CA Corp, its
successors and assigns.
Loan. The word “Loan” means any and all loans and financial accommodations from Lender to
Borrower whether now or hereafter existing, and however evidenced, including without limitation
those loans and financial accommodations described herein or described on any exhibit or
schedule attached to this Agreement from time to time.
Note. The word “Note” means the Note executed by CORNERSTONE REALTY FUND, LLC in the principal
amount of $4,000,000 dated November 19, 2010, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for the note or credit
agreement.
Permitted Liens. The Words “Permitted Liens” mean (1) liens and security interests securing
indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges
either not due or being contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary course of business and
securing obligations which are not yet delinquent; (4) purchase money liens or purchase money
security interests upon or in any property acquired or held by Borrower in the ordinary course
of business to secure indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the ordinary course of business to secure indebtedness outstanding on the date of
this Agreement or permitted to be incurred under the paragraph of this Agreement titled
“Indebtedness and Liens”; (5) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and
security interests which in the aggregate constitute an immaterial and insignificant monetary
amount with respect to the net value of Borrowers’ assets.
Related Documents. The words “Related Documents” mean all promissory notes, credit agreements,
loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, security deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with the Loan.
Security Agreement. The words “Security Agreement” mean and include without limitation any
agreements, promises, covenants, arrangements, understandings or other agreements, whether
created by law, contract, or otherwise, evidencing, governing, representing, or creating a
Security Interest.
Security Interest. The words “Security Interest” mean, without limitation, any and all types of
collateral security, present and future, whether in the form of a lien, charge encumbrance,
mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale
trust receipt, lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever whether created by law, contract, or
otherwise.
Page 9
BUSINESS LOAN AGREEMENT
(Continued)
(Continued)
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND
BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED NOVEMBER 19, 2010.
BORROWER:
CORNERSTONE REALTY FUND, LLC
CORNERSTONE INDUSTRIAL PROPERTIES, LLC, Managing Member/Unitholders of CORNERSTONE REALTY
FUND, LLC
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| XXXXX X. XXXXXXX, President & CEO of CORNERSTONE VENTURES, INC. | ||||
LENDER:
| FARMERS & MERCHANTS
BANK OF LONG BEACH, A CA CORP |
||||
| By: | /s/ Xxxxx X. Xxx | |||
| Xxxxx X. Xxx, Vice President | ||||
